LEW - Lewis Financial Reporting

LEW - Lewis Financial Reporting                                                 
Lewis Group Limited                                                             
(Incorporated in the Republic of South Africa)                                  
(Registration number: 2004/009817/06)                                           
JSE share code; LEW                                                             
ISIN: ZAE000058236                                                              
("Lewis" or "the group")                                                        
LEWIS FINANCIAL REPORTING                                                       
The Board is of the opinion that the article on Lewis published in the Financial
Mail of 22 August 2008 gives a misleading impression of the facts. We again wish
to clearly state our position on insurance income recognition.                  
-    The group has consistently applied its accounting policies relating to     
    insurance and reinsurance revenue.                                          
-    Monarch reinsures 40% of its insurance book with an independent third party
    reinsurer with a genuine and substansive transfer of risk to the reinsurer. 
-    Monarch retains a premium reserve of 40% of ceded premiums which has the   
    effect of deferring reinsurance revenue.                                    
-    Reinsurance is an internationally accepted means of risk transfer and      
    capital optimization.                                                       
-    The group accounts for insurance revenue in terms of its contractual       
    relationship with the parties. Over a 24 month contract, the application of 
    this policy results in 55% of the gross insurance revenue being recognized  
    in the first 12 months and 45% in the second 12 months.                     
-    As a consequence of the above the group earned Insurance Revenue of R564.2 
    mil in the year to March 2008 (55%) (refer pg. 71 of the annual report) and 
    has deferred insurance revenue as balance sheet reserves of R466.3 mil      
    (45%) (refer pg. 19 of the annual report).                                  
-    In the event that the group cease all insurance business with immediate    
    effect, the R466.3 mil would be released as insurance revenue in future     
    periods, a clear indication of our insurance and reinsurance revenue        
    recognition policies recognizing income over the period of the contract.    
-    Our Auditors PricewaterhouseCoopers Inc have issued an unqualified audit   
    report in respect of the year ended March 2008.                             
UBS South Africa (Pty) Ltd                                                      
Sponsor                                                                         
22 August 2008                                                                  
Date: 22/08/2008 12:53:01 Supplied by www.sharenet.co.za                     
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